Case study on Sovereign Debt (Argentina)

[CityFarmer]

The fund is betting on Argentina agrees to terms with holdouts after Dec. 31, after the Rights Upon Future Offers (RUFO) expired. Will Argentina's lady President do it, with helps from China Currency Swap? China may spoil their game plans...

Argentina Gets Reserves Boost From China Currency Swap
Argentina’s Central Bank reserves are set to rise after receiving the first installment of yuan as part of a three-year, $11 billion currency swap agreement with the People’s Bank of China.
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http://www.bloomberg.com/news/2014-10-30...-swap.html

Highland Capital makes concentrated bet on Argentina debt
(Reuters) - Highland Capital Management, a relative newcomer to Argentina's sovereign debt crisis, placed a hefty bet on a resolution early in the new year by putting more than a quarter of its Global Allocation fund into the country's bonds.

The fund's concentration in Argentine debt is the largest, by far, compared with any other single U.S.-domiciled fund investing in the Latin American nation's restructured bonds, according to data from Lipper, a Thomson Reuters service.

James Dondero, the founder of the Dallas-based investment firm with $20 billion under management, started buying Argentina's dollar-denominated restructured debt earlier this year, enticed by hefty yields of more than 8 percent.
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http://www.reuters.com/article/2014/12/0...2F20141205

[CityFarmer]

The negative impact on GDP started...

Argentine economy contracts first time since 2012 on default

BUENOS AIRES (Dec 30): Argentina’s economy contracted more than forecast in the third quarter after the South American nation defaulted on its debt for the second time in 13 years, forcing the government to crimp imports amid a shortage of dollars.

Gross domestic product shrank 0.8 percent from the year-earlier period, the national statistics agency reported today.

The median estimate of nine economists surveyed by Bloomberg was for a decline of 0.6 percent, after growth stalled in the previous three months.
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http://www.theedgemarkets.com/sg/article...12-default

[CityFarmer]

I am not too concern on the tweets. China is also offering its help to Argentina...

Argentine president’s tweets on Chinese accent cause furore

BUENOS AIRES — Embattled Argentine President Cristina Fernandez, while on a state visit to China seeking badly needed investment, caused a furore yesterday (Feb 4) by joking about her hosts’ accents on Twitter.
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http://www.todayonline.com/world/america...use-furore

[CityFarmer]

A little update, without surprise...

Argentina dealt setback by U.S. judge over Citigroup bond payments

NEW YORK - A federal judge on Thursday said Citigroup Inc cannot process interest payments by Argentina on some bonds issued under that country's law, a defeat for the cash-strapped nation as it attempts to re-enter international debt markets.

U.S. District Judge Thomas Griesa in Manhattan said letting Citigroup process the payments on so-called dollar-denominated exchange bonds would violate a requirement that Argentina treat bondholders equally.

Griesa's decision upheld his order on July 28 that blocked Citigroup from making the payments on an estimated $2.3 billion of bonds.
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http://www.todayonline.com/business/citi...s-us-judge

[CityFarmer]

Case closed for the time being...

Citigroup will not appeal U.S. court ruling blocking Argentine bond payments

BUENOS AIRES/NEW YORK - Citigroup Inc will not appeal a U.S. judge's ruling that it cannot process an Argentine sovereign debt payment if he helps the bank exit its custody business in the default-hit country as swiftly as possible, its lawyer said on Wednesday.
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http://www.todayonline.com/business/citi...ent-source

[CityFarmer]

U.S. court authorizes Citigroup to process Argentine bond payments

BUENOS AIRES - Citigroup Inc said it has been authorized by a U.S. judge to process two Argentine debt payments, the bank said, which could ease tensions between the bank and the default-hit nation.

The U.S. bank, which acts as custodian of some Argentine bonds, has been embroiled in a court battle between the South American country and a group of New York-based hedge funds seeking full payment on their defaulted sovereign bonds.

A potential resolution may have moved closer after a ruling by the U.S. District Court for the Southern District of New York on Friday.

The court has stipulated that it will not restrict Citi from meeting its payment-processing obligations relating to dollar-denominated Argentine bond payments under local law due on March 31 and June 30, the bank said in a statement.

The court also said it will not impede the bank from exiting the Argentine custody business, as it has said it wants to do.
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http://www.todayonline.com/business/us-c...d-payments

[CityFarmer]

An interesting and "childish" approach from President Cristina Fernandez?

'Virtual vultures' game in Argentina for angry investors
27 Jul 2015 08:59
[ BUENOS AIRES] It looks a lot like Angry Birds, that addictively silly iPhone game - only in this version, the target is bondholders.

At a state-run amusement park in Argentina, the government is encouraging children to take aim at virtual vultures, a not- so-veiled reference to the nation's international creditors."Mission accomplished!" the screen proclaims when players shoo the digital critters away from hospitals, factories and schools. "We've recovered our national sovereignty together!" The game, it's safe to say, will never become a global phenom like those famous little birds from Finland. But it nonetheless underscores the lengths to which President Cristina Fernandez de Kirchner is going as her government battles with spurned creditors. The message is clear: Even the children of Argentina can play a role.
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BLOOMBERG
Source: Business Times Breaking News

[CityFarmer]

A new gov, provides an opportunity to solve the bond holdout issue...

Argentine front-runner Scioli would seek bond holdout deal: advisor

BUENOS AIRES - Argentina's presidential front-runner wants to settle a financially hobbling suit with bondholders, woo new investors, cut inflation and could revise energy subsidies to put the country's fiscal house in order, his economic advisor said.

Buenos Aires Governor Daniel Scioli may represent the party of outgoing President Cristina Fernandez, whose currency and trade controls have slowed the economy, but his policies may veer away from hers if he wins the October election.

A shift toward orthodoxy could help untangle Argentina's relationship with the global bond market and attract foreign companies eager to exploit the country's natural resources.
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http://www.todayonline.com/world/argenti...al-advisor

[CityFarmer]

Update on the Argentina case study. One important international precedent to note...

U.S. appeals court says bondholders cannot seize Argentina's reserves

NEW YORK - Argentina's central bank on Monday won the reversal of a U.S. court ruling that had allowed bondholders to try to hold it responsible for the country's obligations on debt that has been in default since 2002.

The 2nd U.S. Circuit Court of Appeals in New York overturned a 2013 ruling denying a bid by Banco Central de la República Argentina (BCRA) to dismiss claims by U.S. investment firms holding $2.4 billion in judgments against the South American country.

U.S. District Judge Thomas Griesa had previously held that the central bank had waived its sovereign immunity, and that as a result, the hedge funds could move forward with a lawsuit targeting the bank's assets.

Argentina is lobbying internationally for tighter controls on the activities of junk debt specialists, which President Cristina Fernandez's leftist government brands "vultures."

The ruling "sets an international precedent and guarantees that vulture funds will not be allowed to seize the reserves of the central bank," bank President Alejandro Vanoli said in a statement.
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http://www.todayonline.com/business/us-a...older-case

[weijian]

In the older days, these vultures would have lobbied their governments to send in their fleet to demand payment or seize collateral!